IMF denies saying EPA scam closed

(Interview with Roger Nord, a Senior Advisor in the Africa Department at the IMF)
By Costantine Sebastian
Published in The Citizen (Dar-es-Salaam), October 15, 2008

The International Monetary Fund (IMF) has not declared the External Payment Arrears (EPA) account issue closed as reported by the local media in recent weeks, IMF officials have said.

Neither has the fund softened its stance on other pending good governance issues in its relationship with the Government.

Officials handling Tanzania's docket said IMF would continue to pursue the EPA case to its conclusion and ensure that all pending issues were comprehensively addressed to its satisfaction.

The position was stated at the Bretton Woods Institutions annual general meetings in Washington following claims in some official quarters that the IMF had given Tanzania a clean bill of health on the matter. This prompted some Opposition leaders to accuse the IMF of impeding the war on corruption by refusing to adopt a hardline stance against the Government.

Numerous bloggers say the ruling party's operatives want to make political capital out of the reports that the IMF had declared the case closed, and that the Government is using the reports to repair its dented image on good governance.

The argument is that the matter should be closed following the IMF's statement and even the donor community had agreed to fund this year's budget, having previously threatened to withhold their money pending action on grand corruption scandals, including the EPA scam.

However, IMF officials said that expressing satisfaction with the measures the Government had taken so far in handling the multi-billion-shilling scandal did not mean that the case had been closed.

They emphasized in an exclusive interview with this newspaper that there was still more to be done on the scandal that had tarnished the country's image as far as good governance was concerned.

"We welcome the steps that have been taken to date, but the process has not ended.

The IMF will continue to work closely with the Tanzanian authorities in this area," IMF African department deputy director Roger Nord said without specifically pointing out the pending issues.

"Let me be very clear. The IMF does not condone corruption?not in Tanzania and not anywhere else in the world.

"In the particular case of the EPA account, you will recall that once this issue arose in late 2006, the sixth review of the PRGF (Poverty Reduction and Growth Facility) arrangement was delayed for several months until a strategy for resolving this issue and preventing further leakage from the central bank balance sheet was elaborated," Mr Nord said.

He added that subsequent discussions in the context of the Policy Support Instrument (PSI) had always assessed progress in addressing the scandal.

Steps taken by the Government that have impressed the IMF include the special audit of the scam in which Sh133 billion was siphoned out of the account that was under the watch of the Bank of Tanzania and the "clear" action plan in response to the audit report. Mr Nord listed other measures as the freezing of the account and formation of a committee to pursue asset recovery and lay the ground for legal proceedings.

He said measures that had been taken over the past nine months at BoT to strengthen its management were good indication of the Government's seriousness on the matter. The scandal, which involved fraudulent payments to 22 shadowy firms, has also already claimed casualties at the central bank. They included former governor Daudi Ballali who was sacked earlier this year. Dr Ballali died in the US a few months later.

Critics are querying why no names have been mentioned to show who took what in the scandal. The likes of opposition leader Ibrahim Lipumba are also not happy with the level of transparency in the case and query why nobody has been charged.

During a recent meeting with President Kikwete, IMF managing director Dominique Strauss-Kahn is said to have endorsed the manner in which the Government is dealing with the EPA scam. IMF officials said their boss only expressed satisfaction at the steps taken so far but nowhere did he say that the EPA case was closed.

Last week, Prof Lipumba said the Civic United Front had been shocked by reports that the IMF has praised the Government's handling of the EPA scandal. He said the party had written to Mr Strauss-Kahn to protest the manner in which the institution viewed good governance in Tanzania.

He said IMF must not support President Kikwete's government because measures taken so far were not enough. The seasoned economist said CUF was mostly not satisfied with the grace period the scandal suspects had been given to return the loot.

"It is high time the IMF showed that it is supporting Tanzania to fight grand corruption and not supporting minor steps. It must make sure all the money is returned," he said.